Palantir Technologies (PLTR -1.41%) plunged 21% on Monday after the data analytics company's first-quarter earnings and guidance fell short of investors' expectations.
The software provider's revenue rose 31% year over year to $446 million. The gains were fueled by an 86% jump in Palantir's customer count, to 277. Those customers also spent more on Palantir's platform, as evidenced by its net dollar retention rate of 124%.
Yet while Palantir's commercial revenue surged 54%, to $205 million -- including an impressive 136% increase in the U.S. -- its larger government business saw revenue rise by only 16%, to $241 million. That was a surprise to investors, as the company was widely believed to see significantly higher demand for its government- and defense-focused data services due to the war in Ukraine.
All told, Palantir generated an operating loss of $39 million, compared with a loss of $114 million in the year-ago quarter. Despite that improvement, the company's adjusted earnings per share, which strips out stock-based compensation, declined by 50% to $0.02. That was well below Wall Street's estimates. Analysts had expected adjusted per-share profits of $0.04.
Investors were also troubled by Palantir's tepid sales forecast. Management guided for revenue of $470 million in the second quarter. That would represent a notable deceleration in growth, to roughly 25%.
Still, Palantir said there's "a wide range of potential upside" to its sales outlook, including geopolitical-driven business gains. The company also reiterated its long-term goal of growing revenue by at least 30% annually through 2025.